11.08.2009

It is all about GDP







Source: Telegraph








No doubt that GDP has become a mega star again in this week’s newspaper, both in China and UK. And the whole world is her audience. Under the shadow of the crisis, it is not surprising to know that most countries, esp. UK and USA, are still trapped there. While I went through the comparison on Telegraph, I just burst out laughing when I saw China’s “never in recession” stand out among the list of suffering countries (“still in recession”/ “out of recession”) above. Indeed, China shocked the world with the 8.9% increase GDP for 3rd quarter. On the other hand, UK economy shrank by 0.4% for the same period, which was a shock as well to the optimistic analysts. It is all about GDP this week.


GDP is by far one of the most obvious and important economic indicators, which could bring about the speculations of one nation’s future policies. Besides, it is always worth reading how the analysts defend their previous and totally opposite predictions.(Eg. UK this time).And to be frank, is there anything to learn from Chinese success in the recovery process?


Good news first. China did it—the promise that the nation would maintain the growth over 8%. According to official data (source), besides the 8.9% overall growth, the highlights lies in the fall of CPI (1.1%), the continuous increase in retailing and climbing figure of fixed-asset investment and housing price. Take a look at the official press release, it is just good news along the way. As usual it is hard to get any indication of policy shifts from the official documents. Only the need is to expand the internal demand and keep the upward trend. And though the concern for inflation is mentioned in several comments in Chinese media, it seemed the government still took the moderately loose monetary policy for now.

The rebound is firm; no sign of inflation yet; public confidence goes up...those all are the key points in the coverage in Chinese media. Most news quoted the statistics from the government and analyses from “experts” are quite similar. In a word, most media remain extremely optimistic towards the economy in China right now. What is more, people are satisfied with it, which is obvious from all the great predictions on the 8% GDP growth over the year. On the contrary, the Chinese are not as optimistic as the government. In several blogs, people are sceptical of the credibility of data from the bureau, which is mainly due to the common exaggeration of the economic performance by the government and the decline of actual living conditions resulting from the subtle inflation.

Nevertheless, the incredible number 8% surprised most international media when most countries are still suffering. AP delivered a comprehensive analysis on the growth in China. The report is very critical and detailed with lots of data and comparison with other countries. Besides, though mentioning the government stimulus as the main reason for the economic boost, the news did not just focus on criticizing the policy as some Western media did. Critiques and quotations from Chinese officials are mentioned in turn. Generally speaking, despite the concern for Chinese dependence on export and the imbalance in structure, the article emphasized the remarkable role of Chinese economy and market in the world.

WSJ also posted an article with so much optimism and enthusiasm into the future of Chinese economy. Even more optimistic about the economic recovery in China, this piece of news provided the readers with all kinds of data, from the bureau, interviews from the professionals, investors and foreign companies in China. All the data and remarks in the article seemed to show a bright future ahead. Though mentioning the global worries, it always presented the best argument and convinced me a really great Chinese economy and good outlook on world economy.
Under most circumstance, it is really rare to see any media coverage on Chinese economy that could be regarded fair and objective. Either it is too optimistic with the ignorance of actual complicated Chinese situation. Or it is criticism all over, like most western media do at the moment. As seen on the blog on Forbes, Chinese economy is all about fake data and “over-reliance on stimulus package”. It is quite a surprise to me that the analysis is somehow well organized and filled with actual data. And the argument the author made is true to some extent. However, the totally negative review made the article not newsworthy at all.

China is developing under such a unique mode that it became so hard to understand or fit into any western economic theory. Anyway you could just do as they did on Mail online, see the news as an indicator for investing in China. The news is quite blunt pointing out the “sole reason” to be the government stimulus. The term “lavish” there indicated their view on the approach. However at the end, it did mention the attention from international investors on the wording used by Chinese officials, which is quite precise and good point according to the situation in the country.

The news on mail online also mentioned the GDP figure in UK would be released soon and its good wish towards an optimistic figure. Unfortunately, when the data was released next day, the whole nation was in dismay. Or I should say “shocked”, as seen in lots of headlines among the domestic newspaper. Every news article reported the “unexpected” 0.4% contraction instead of the expected rise. What is more, it is the longest recession in UK. Compared with the objective Reuters, the report on Time online is more concerned with domestic response under such bad conditions. Ironically, the article recalled previous optimistic predication made by economists and PM. The change of VAT and interview with retailing section just made the news closer and more connected to domestic consumers. The mere GDP figure, under most conditions, does not really make you feel how bad the economy is.

There is another blog on Times, which is just straightforward criticizing the previous predictions by most economists. “Useless” economists, as they said, still regarded the data not calculated right, which is just pathetic argument to defend their previous opinions. It is the truth that the economy in UK is still in deep recession. With the weak figures in every area, the article is all about pessimistic views.


Then reading the comment on guardian, I started to realize the disappointment towards those economists. After all, it is not about those predictions but the terrible economy right now. The author analyzed the possible results from the contraction and nothing optimistic was mentioned. Indeed it is really dark cloudy days for UK right now, especially with other major euro economy out of recession.


PS, this is the blog for the week before. I was sick from a fever and didnt post it.Sorry for the delay.

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